Rabobank makes tilt at deposits

Rabobank’s online arm has kicked off an aggressive grab for deposits, offering a competitive savings rate that pits the Dutch group against the Big Four as it seeks to diversify funding and lift its profile in the local market.

Rabobank Australia holds just 0.25 per cent of the domestic ­deposit pool, according to the prudential regulator. Its peer ING Bank Australia holds 2.15 per cent, and market leader
Commonwealth Bank of Australia
commands a share of more than a 22 per cent.

RaboDirect’s investments manager, Tim Hewson, said: “We’re going to be fairly aggressive in the market over a prolonged period on both customer retention and pricing."

Pressed on the economics of the bank’s offer, he said: “There’s a cost associated with raising ­deposits from the retail market."

In line with its overseas branding, Rabo’s online business, Rabo­Plus, will be renamed Rabo­Direct, and will offer all clients a variable rate of 6.40 per cent on its high interest savings ­account until December.

Mr Hewson said Rabo would also seek to educate the retail market on terms that could disadvantage them – such as honeymoon rates offered only to new clients of a product while existing customers took a lower price.

Southern Cross Equities analyst T. S. Lim said Rabo’s strategy was similar to that of
Australia and New Zealand Banking Group
, in that both were aiming to build a deposit base in offshore markets. ANZ is seeking retail deposits in Asia, and Mr Lim said that ­despite the intensity of local ­deposit competition over the year, Rabobank had not left it too late to enter the fray.

“Given what’s happened in Europe [with instability around Greece] it’s always good to get more retail deposits," he said.

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Several bank chief executives have labelled deposit pricing ­unsustainable, with some signs of rate softening since the start of the year. But Mr Hewson backed comments by Reserve Bank of Australia assistant governor
Malcolm Edey
, who noted this week that new liquidity requirements and client price sensitivity would keep upward pressure on rates.

Mr Hewson, who oversees the wholesale managed fund business of Rabobank, said all banks’ pricing strategies on both sides of the balance sheet had become more unpredictable after the credit crisis. Rabobank has about $900 billion in assets globally, easily outstripping the Big Four banks locally on the same ­measure.